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Japan-China relationship is on the mend

by Masahiro Kohara

Contributing Writer

Momentum can change trends in international relations. A series of summits in Panmunjom and Tokyo has created growing momentum toward dialogue and peace rather than pressure and tension.

In April, the leaders of the two Koreas agreed to work with the United States and China with a view to ending the seven-decade Korean War and pursuing the “complete denuclearization” of the Korean Peninsula.

This month, the leaders of Japan, China and South Korea displayed cooperative and amicable postures. The rising momentum toward improvement in Japan-China ties and Japan-South Korea relations has dramatically changed a regional vibe long strained by sensitive issues such as “comfort women” and the Senkaku Islands.

The initial momentum, created at the North-South summit, contributed to the second round of momentum in the trilateral summit in Tokyo. Dialogue and cooperation has now become mainstream in East Asian countries.

Will this momentum continue and lead to sustainable stability in the region?

Let me focus on the momentum for improvement in Japan-China relations.

There are economic and political aspects to be discussed in judging the development of the relationship between the two great powers in East Asia. These aspects have optimism and pessimism as well as expectations and skepticism.

First is the economic aspect.

The two countries are faced with uncertainty and risk in the midst of trade friction with the U.S., in particular increasing concerns about a trade war between China and the U.S. that could hurt their own economies as well as those of their major trading partners, including Japan. Strengthening economic ties between Japan and China would benefit both countries. During the summits they shared an understanding of the importance of free trade.

China is Japan’s biggest trading partner. Almost half of all overseas operations set up by Japanese companies are located in China. They would increase their enthusiasm and expectations for expanded business opportunities if renewed cooperation in various fields between the two governments strengthen bilateral economic ties. The recent efforts by China to improve its investment environment, including by granting Japan a 200 billion yuan ($31.4 billion) investment quota for the first time to buy Chinese stocks, bonds and other assets, are also encouraging. However, as European and U.S. financial institutions have already been granted such an investment quota, it remains to be seen how much this really benefits Japanese firms.

There are more things to be done by the Chinese government, such as strengthening protection of intellectual property rights and joining the World Trade Organization’s Government Procurement Agreement.

Even though Japan and China agreed to accelerate negotiations for a free trade agreement between them and South Korea, and for the Regional Comprehensive Economic Partnership (RCEP), they must overcome substantial differences in their positions. Japan has sought high-level standards of liberalization, such as substantial tariff reductions and thorough protection of intellectual property rights incorporated in the Japan-led Trans-Pacific Partnership. However, China has been calling in RCEP talks for gradual liberalization. Amid the trade turbulence, it is necessary for the largest trading country to demonstrate the political will to achieve higher standards of liberalization for the sake of sustainable economic growth both for it and the world.

At the Boao Forum in April, Chinese President Xi Jinping pledged that “we will increase our alignment with international rule, increase transparency and intellectual property protection.” The world is now waiting for China’s first real action following its rhetorical promise.

We are entering the fourth industrial revolution. It is a hybrid industry of the digital and real economy — artificial intelligence, robotics, big data, 3-D printing, new materials and biotechnology. The nation that is most innovative and adopts emerging technologies will be the next global economic leader. Major economies will compete to win this historic race for innovation in the coming decade. China will take advantage of its state capitalism as symbolized by its Made in China 2025 policy. A matter of concern is China’s technology transfer policies. Tech transfers as a condition of foreign direct investment must be rolled back. This will require the Trump administration to work with like-minded developed states to revitalize the rules-based international order, rather than its unilateral actions under the “America First” policy. Japan should work actively on not only China but also the U.S.

Second is the political aspect.

Trump’s “America First” policy has been rocking the world.

Some critics in China argue that U.S. allies can no longer count on Washington and Beijing should seize the opportunity to be a world leader.

From the viewpoint of long-term Japanese national interests, however, its relationship with the U.S. cannot be substituted for its relationship with China — and vice versa. Japan must always make every effort to develop stronger ties with both countries. In this context, the Japan-U.S. security alliance makes that relationship more stable and durable than Japan-China ties. Therefore, Japan and China need strong political will to develop their relations.

This year marks the 40th anniversary of the signing of the Japan-China Treaty of Peace and Friendship. Optimists expect both countries to cherish this momentum for improved bilateral ties and continue to do their utmost to make it happen.

But some experts say the rapprochement remains fragile as flashpoints such as the East China Sea dispute and Japan’s unwillingness to face up to its history of aggression could easily derail the encouraging trend.

This view is too pessimistic.

Any relationship between countries has both shared and conflicting interests.

As neighboring countries, Japan and China have a long and complicated historical relations, and they have developed ties in various fields. It is not unusual that Japan and China have difficult issues and problems. Yes, some problems still remain unresolved.

However, if you focus too much on a few sensitive pending issues, you might invite such repercussions as excessive nationalism that could hurt or even destroy the entire relationship. In this regard, it is a minimum but steady achievement that Japan and China agreed to implement a “Maritime and Aerial Communication Mechanism” between their defense authorities to avert unintended clashes between their armed forces in and above nearby water.

It is important to increase fields where both countries can enjoy cooperative win-win relations and to manage difficult-to-resolve issues in order not to undermine common interests.

It is wise diplomacy to stabilize the relationship and develop mutually beneficial areas based on common strategic interests, as was stipulated in the joint statement between the two governments in 2008.

Chinese Premier Li Keqiang said at a press conference on the sidelines of China’s annual legislative session in March, “If we have seen a spring in the China-Japan relationship, we must also watch out for any possible return of chills.”

Realism is a mirror of international politics. Both leaders should be cautiously optimistic.

The key to stable development is to strengthen dialogue and consultations in all levels and fields with China. In particular, the top leaders should meet more frequently and regularly, including exchanges of visits.

Li’s visit, his first official trip to Japan since he became premier, is a good start to pave the way for an Abe visit to China this year and Xi visit to Japan next year. Momentum can be maintained in this period and possibly beyond.

Masahiro Kohara is a professor at the University of Tokyo’s Graduate School of Law and Politics. Previously he served as a career diplomat in the Foreign Ministry.